Things to Know Before Getting a Mortgage

26-Apr-2009

What should I do before looking for a mortgage quote?

First, calculate your budget. How much you can afford to pay every month? A mortgage quote will be available to you based on your gross income, but you also need to consider the additional fees involved in your mortgage, because they will be considerable.  While looking for a mortgage quote, don?t just look for the lowest interest rate, but use the APR (annual percentage rate) as the basis for comparison.  You should also compare the terms and conditions of each lender, to ensure that there are no restrictions that could negatively impact on your financial circumstances.

As a rough guide, mortgages quotes are based on 3.25 times the gross income of a single borrower. For joint borrowers, the maximum loan amount is likely to be 3.25 times the first income plus one times the second income, or 2.5 times the joint income.  Despite the economic downturn, there is still a lot of competition in the mortgage market, so feel free to ask for special incentives. Often times lenders will waive valuation fees or legal fees in order to attract new customers.

How do I get the best mortgage quote?

Your challenge is to match a mortgage product to your personal financial situation. You need to consider current market conditions, your attitude toward risk, and how long you plan to stay in the house.  For example, if you are keen to know exactly how much you will have to pay each month, a fixed rate mortgage is probably the best one for you.  Alternatively, if you are prepared to link your mortgage interest payments to the Bank of England base rate, in the hope that your interest payments will be lower as a result, you may wish to opt for a tracker mortgage.

Your checklist when searching for home mortgage loans should look something like this:

    * What will the monthly payments be?
    * Are there any redemption penalties?
    * What will be the rate type - fixed, capped or discount?
    * Will there be an arrangement fee?
    * Is the lender providing any incentives?
    * Is there tie-in insurance?
    * How will interest be charged?
    * Is the mortgage flexible in terms of your monthly payments?

If you'd like assistance finding the best mortgage quote for you, take a second to fill out the short questionnaire on our mortgage pages, and a qualified mortgage adviser from the SimplyFinance network will get in touch to talk you through your options.